Tariffs and the Tax Cut - WSJ editorial

More than a few conservative intellectuals have warmed to Donald Trump’s trade protectionism because it supposedly helps blue-collar Americans. But what if his tariffs do the opposite?

Erica York at the Tax Foundation crunched some numbers recently showing that Mr. Trump’s proposal for a 25% tariff on imported cars, trucks and parts could eliminate half of the income gains from tax reform for millions of Americans. Those in the lowest income quintile could lose 49% of their tax gains. Say for ease of calculation that these folks received a $100 after-tax bonus from changes like the doubled standard deduction. After auto tariffs that would be whittled down to $51, Ms. York notes.

The tariffs shave gains in all income brackets, but no one is hurt more than the poor and middle class. Take the fourth income quintile, or a household making at most about $70,000 a year in adjusted gross income. The Tax Foundation says auto tariffs could erase nearly 30% of that family’s after-tax income bump. Ditto for the third quintile, or a family earning no more than $43,000 a year.

Tariffs are inherently regressive because low-income Americans spend more of their income on household goods. Commerce Secretary Wilbur Ross has argued that no one will notice price increases—what’s a few cents more for a can of soup? But people in Mr. Ross’s income strata are not the Trump base.

The Commerce Department is still looking at whether a muffler is a national security threat under Section 232 of the Trade Expansion Act of 1962. President Trump should abandon the idea lest Americans wonder if they really benefitted from that tax cut.

2. So, you disagree with the study that tariffs would cause people half the amount

3. Tariffs will wipe out all wage gains for years.

And if anyone thinks for five minutes,jobs are going to magically appear in a month or two. Forget about it. Takes five years to put the infrastructure together to produce one new Job.

By then,the Recession will be so deep that it will take massive Governmental Funding to stave off a total collapse of all Retail as well as most Banking . With most of the States adopting the Walker Scheme,it will look like 1929 all over again.

BTW,references to this Model occurring was talked about the day after the GOP Robin Hood Tax Bill was signed. And yes they mentioned the Tariffs which were planned by the GOP as a add on after they wipe out Social Security and Medicare.

Learn a long time ago,once Murdoch bought the WSJ,read it twice and think about it.